This month has focused on Business Intelligence, the process of gathering all your organization knows (typically through a centralized database and a cool data visualization tool, etc.) and improving your analysis and decision making. A key component to great BI is how to get at all of the data relevant to your constituents–bio-demographic, giving, activities, and, more and more, their online engagement. This means what Facebook, LinkedIn and others do matters to your fundraising operations.

Facebook (NASDAQ: FB) is delving deeper into providing a donor giving application function. The NonProfit Times offered a helpful synopsis of the Facebook’s plans. On its face, this is a neat idea and may hold promise for the charities involved. But it also has some risks. (How) will data be shared? What fees are involved (FB doesn’t have any now)? And, my personal favorite, what will be the real cost of handling such giving, particularly when the thrust of the tool appears to be tribute giving.

This last point is important. On the one hand, I’ve written about the real costs of handling any gift. It’s pretty hard to do for less than about $7. No matter what. On the other hand, once a nonprofit loses control over data and deliverables, there can be substantial donor service costs. For example, a few years ago, as a result of a Facebook fundraising effort outside of its control, a client of mine spent dozens of staff hours trying to make a few donors-via-Facebook happy. This effort appears more structured than the example I shared, but the data-exchange-donor-satisfaction issue could be significant.

So, as technology marches forward, keep in mind the some innovations have costs that should be calculated. Want to see what it costs your team to process a gift? Check out my calculator here.

I get this question a lot: how much should it cost to process a gift? It’s a valid question most easily handled with: “It depends.” Well, I’m tired of that answer so I’ve devised a calculation. My math is not as important as your organization’s math, but we should all be more focused on how to deliver more resources to forward our missions (i.e., streamline costs and/or increase revenues).

What are the costs of processing a gift or pledge? The components vary, by gift type, organization type, and others. The main cost is staff time, but we should also include a portion of the database costs, any services or service fees, and the materials/resources involved.

With costs estimated, how do these costs accumulate? Gift processing has four stages–intake, batching, entry, and finalization–so I’ve explored each to give a sense of costs per stage:

Intake: how the gift comes in affects costs.

Batching: the type of gift and associated information should be factored in.

Entry: some gifts take a lot longer to enter than others.

Finalization: receipts, thank yous, and reconciliation all take time and money.

Of course, every organization will differ in the actual calculation. That’s part of what makes this such a hard number to determine. Have a look at this infographic that calculates the cost to process each gift:

Your team's numbers will differ, but these components add up

The bottom line is that all gifts cost time, energy, and resources to process. Is your cost $6.50 per gift? Is it much more? Less? If your team is too efficient, you may be missing stewardship or quality control opportunities. Below some level, a gift costs an organization money. That number is probably closer to $20 for some gifts (tributes) than anyone would like to admit, especially if your team processes thousands of $20 gifts. The nature of philanthropy makes it nearly impossible (and certainly un-palatable) to reject small gifts, but messaging around the impact of giving could switch from the overly naive “every dollar counts” notion to something more sophisticated. So, be sure your efforts are pointing donors in the right direction.

Don’t take my word for it. Do the math. Then, with your organization’s answer(s), try to shape donor behaviors through smarter direct response strategies supported by streamlining your operations so that you deliver as much money as possible to support your mission.

It seems that 2012 will be a year for change in fundraising operations. The proverbial dust is starting to settle on one of the two biggest fundraising operations stories in months. In January, Datatel and SungardHE finalized their merger (click here for details). January also held the other big story about the purchase of Convio by Blackbaud (click here for details).

The Twitterverse has been abuzz. ListServs, blog posts, calls to account managers…the volume of attention to these issues has been significant. How much does it matter? In total, not much.

Wondering if your technology is well-used. Click here for a Test.

Fundraising is still a predominantly top-down, inside-out business (with some exceptions). Grass-roots, high-volume, high-tech fundraising is neat and (somewhat) new, but the essentials–asking engaged people of means for very large gifts–is where most campaigns are won. And, frankly, an organization’s database of choice affects these sorts of gifts less than we might think. For example, have a look at this technology transition cycle. What you will notice is that it’s a loop: you’re never quite finished because you should be constantly learning and adapting the use of your technology. Without long-range, comprehensive implementation plans to fully leverage our technology, we tend to have databases that house name, address, giving, and a few other details.

Now, this may sound odd coming from a guy who champions fundraising operations, published a book to inform fundraising ex Continue reading →